KiwiBuild “socialism for the rich”

Phil Twyford and Labour talked up their ambitious KiwiBuild policy while in opposition, but have found implementation in Government difficult.

This week Twyford announced eligibility criteria for going in the ballot to get a KiwiBuild house which includes income caps of $120k for a single person and $180k for a couple. This has raised fresh criticisms.

Barry Soper: KiwiBuild scheme looking more and more like middle-class welfare

Phil Twyford was, in his words, opening the door to affordable home ownership, which was little more than a public relations exercise. He invited aspiring home owners to register their interest in a ballot for a KiwiBuild home which was a bit like taking a stab in the dark.

Far from opening the door, there’s still not a door to open – the first house has yet to make its appearance and over the next year just 1000 doors will beckon the ballots. And to qualify for a key to your phantom household you’ll have to be earning less than $120,000 if you’re a singleton and $180,000 if you have a partner.

Unfortunately it looks as though it’s shaping up to be a middle class housing programme where you’d certainly need that level of income to cope with the mortgage, with the current average expected to be $650,000 and rising.

$120-180k is hardly middle classes. It’s double average incomes.

The Government has also been criticised for it’s expensive fee-free tertiary education policy mostly benefiting better off students. And for it’s ‘winter warmer’ handout going to all pensioners, including far from poor ones like Winston Peters.

Bryce Edwards’ Political Roundup: Kiwibuild is now “socialism for the rich”

If there was any excitement brewing at being able to enter a lottery to buy an affordable Kiwibuild house, it was certainly short-lived, as further details revealed that the “lottery of birth” has probably already scuttled most people’s chances. Disappointment is setting in as more people realise that the scheme is really only going to benefit the rich.

This is because the houses are priced so high that few will be able to afford to even enter the final ballot for them. What’s more, many are asking why the income caps have been pitched so high that the scheme seems destined to be dominated by rich buyers who are after a good investment.

Newshub’s Jenna Lynch was highly critical: “in effect there is no real income cap. Only the top eight per cent won’t be able to buy these homes. It’s a free for all. This is not going to help those on low or middle incomes – they’ll be locked out by relatively high wage earners” – see her column: Kiwibuild a free for all.

According to Stuff journalist Henry Cooke, the “sky-high income cap”, together with any lack of “weighting for need or income like there is for state houses”, means the rich will benefit the most: “Needy families who could really use the help will be out in the cold hard private rental market while a couple of doctors making $80k each will happily move into a nice new home” – see: Why the Government is letting the rich buy KiwiBuild homes.

But Cooke reports that there is some logic behind this “socialism for the rich” approach. First, Twyford argues that there will be a trickle-down effect whereby the rich buying the Kiwibuild houses will eventually benefit the poor through other houses becoming cheaper (or just not getting more expensive).

I thought that ‘trickle down’ was a dirty term these days, especially on Labour’s left.

Second, there’s the need, electorally, for Labour to keep the rich happy, with the idea that Kiwibuild is also for them: “Setting the income cap so high also invites quite a lot of middle-class buy-in.”

In other words, handing out houses to a voting demographic. Some may call that vote buying (using taxpayer money).

Third, there’s a likelihood that the Government will actually need rich people to be buying the houses, given that they will be unaffordable to most others.

New houses are usually too expensive for lower income first home buyers.

There’s a line being run by the Government that the lottery-element of Kiwibuild is a great equaliser – because poor applicants have just as much chance of having their name picked as rich applicants. Twyford has said “Everyone has an equal shot in the ballot so people who are on a low income, or a high income, as long as they fit the criteria … then they can have a crack at doing this” – see Jane Patterson’s Ballot will keep Kiwibuild equal, Twyford says.

“Great equaliser’ is a nonsense claim.

It is an equal chance for those who can afford a half million dollar plus new house to be drawn from the ballot, but only some will be able to win a prize house.

From Reddit:

When even avowed lefty Bryce Edwards is calling you out with such a brutal headline you have a problem Phil.

This whole thing has been a complete and utter disaster from Labour. They campaigned on a fantasy and instead the lower and middle classes’ tax dollars are going straight into the pockets of property developers and investors.

He even used the trickle down argument!

Twyford seems to be stumbling from Pr disaster to disaster, and at best it is going to take some time for KiwiBuild to actually build any significant number of houses.

And by trying to show that he is making progress well before significant progress has been made could backfire.

If people who could afford to build their own home decide to sit and wait in the ballot hoping for a windfall capital gain thanks to the Government it could reduce new house building further in the private sector.

 

 

Previous Post

28 Comments

  1. High Flying Duck

     /  July 6, 2018

    This policy has been doomed from the start. It was a great slogan in opposition, but the telling line in the post is:

    “New houses are usually too expensive for lower income first home buyers.”

    Anyone who thought the Government could build new housing that would be affordable to lower income earners is dreaming.

    • duperez

       /  July 6, 2018

      Slogans are good while in Government too. Remember National’s “Comprehensive Housing Plan”? That was to be etched in the minds.

  2. Grimm

     /  July 6, 2018

    The best thing that could now happen for Phil is that none of them actually get built.

    Imagine the first keys being handed over to the doctor or lawyer couple. The media would murder Labour all over again. Then imagine them selling the taxpayer subsidised house three years later at a massive capital gain, then moving back into the house that daddy bought them.

  3. Blazer

     /  July 6, 2018

    ‘imagine the first keys being handed over to the doctor or lawyer couple’
    I imagine that couple have stuck with National waiting for Keys 4 point plan to kick in…in vain.
    Increasing the stock of state houses and banning non resident foreigners will free up some housing for prospective buyers as well.

    The housing crisis is the legacy of 9 years of National Govt.

    • Grimm

       /  July 6, 2018

      OMG, now you’re on the side of the rich.

      And that pretty much sums up the left these days. Preaching inclusiveness, while spewing bile at whoever the party deems the enemy today. Never mind that this policy is demonstrably against everything that Labour have ever stood for* .We will fight to the death to protect the party spin.

      *middle class welfare aside. Or is that all they do now?

    • Trevors_Elbow

       /  July 6, 2018

      No BOL… its been brewing since 1991

      Labour and National have pursued the same broad regulatory and migration policies since then. Both supported the RMA and both supported making LGA’s all powerful around building consenting and zoning, with the inevitable Central Planner we no best outcomes.

      Let Johnboy go BOL – KDS, JDS, EDS is not healthy for your mental state.

      Labour and National equally culpable

      • PartisanZ

         /  July 6, 2018

        They maintain the FIIRE economy on behalf of corporate-capitalist-political elites … eh Trevor?

        Why else would this stuff be happening? And for so long?

        Do people honestly think that while the Business Right Table controls government, the government’s own bureaucracy has been hijacked by the Left to constrict business growth by imposing countless regulations … simultaneously furthering the Left’s ‘long march through institutions’?

        Let’s set aside this far-fetched idea – even if for just a moment – and therefore ask: Why would business want it’s own markets so heavily regulated?

        Or: How does all this regulation serve business interests?

  4. Blazer

     /  July 6, 2018

    Key again….

    ‘Ensuring people are in a better financial position to afford a house.
    Freeing up the supply of land.
    Dealing with the compliance issues that drive up building costs.
    Allowing state house tenants to buy the houses they live in

    ‘The Government’s own research into home affordability has stated in no uncertain terms that, “The RMA process needs a revamp to reduce delays associated with objections.” That’s because delays result in major uncertainty for people considering developing housing.

    They also cost money directly. A one-month delay on a $12 million project adds $100,000 to its cost. This increased cost in turn increases the required profit margin for houses and thus the price of those houses when they eventually come to be sold. This is just one more way that the RMA hits first-home buyers in the hip-pocket. .

    National is committed to simplifying and streamlining the RMA and doing it fast. We will introduce our RMA reform bill in the first 100 days of a National Government. Those changes will be made into law within six months.’

    what happened…?Banks,RE industry,developers,speculators,media…

    let it run…we’re making…$$$$$$$$$$$$$$$’

    • High Flying Duck

       /  July 6, 2018

      Labour, Winston and Peter Dunne all blocked any meaningful RMA reform. You are basically showing why is wasn’t National’s fault, and why Labour still isn’t fixing the problem.

      • Blazer

         /  July 6, 2018

        how did they block it…when National had a majority?

        • High Flying Duck

           /  July 6, 2018

          Did you notice the name Peter Dunne in there…

          • Blazer

             /  July 6, 2018

            and the other 3 factors they were going to address…

            ‘Ensuring people are in a better financial position to afford a house.
            Freeing up the supply of land.
            Dealing with the compliance issues that drive up building costs.
            Allowing state house tenants to buy the houses they live in’

            Din’t realise Dunne had them at his mercy for 3 terms!

            • High Flying Duck

               /  July 6, 2018

              The housing issue was not really an issue in the first term.
              Wage rises outstripped inflation for the duration of the National government, interest rates dropped, affordability was as good as it had been in 20 years.
              Freeing up land is a council issue.
              The RMA reform was being devised for a significant period of time. Winston got Whangarei and took away the majority about a month before it went to the house.

            • Alan Wilkinson

               /  July 6, 2018

              Blazer knows the facts. He just repeatedly ignores them as he trolls.

            • Blazer

               /  July 6, 2018

              yes Al,I do know the facts…this is the primary point of difference in my arguments with the likes of..you,who invent them as you see fit.

  5. High Flying Duck

     /  July 6, 2018

    Kiwibuild – just a big transfer of wealth to lucky individuals…

    “Those people lucky enough to win the KiwiBuild lottery will buy their home at a heavy discount.

    And when they sell it in the future, they’ll receive the full market price. That doesn’t make any sense.

    To see why, let’s keep things simple. Suppose lucky Bob gets to pay only $500k for a KiwiBuild house that’s valued at $1 million in the open market.

    After three years he decides to sell. If the market stayed flat, he’ll pocket a windfall of half a million, a parting gift from the Government. Even if the market plummeted by 50 per cent, he’ll break even.

    Bob’s twin brother Todd didn’t win the lottery. Yet he somehow managed to secure a loan to buy a similar $1m home in the open market.

    Suppose he put down the same amount of deposit as Bob did. So he will have to borrow $500k more than Bob did, which means he’ll pay hundreds of thousands more in interest over the life of the loan.

    When he decides to sell, of course there will be no parting gift from the Government. If the market plummeted, he’ll probably go bankrupt.

    So Bob wins a double jackpot: huge savings in loan interest and immediate doubling of house value. Meanwhile Todd gets nothing, all because of his (lack of) luck.”

    https://www.stuff.co.nz/national/105278941/double-jackpot-for-kiwibuild-winners-is-wrong

    • Blazer

       /  July 6, 2018

      here is the ‘raison d’etre’ of National Party policy…’just a big transfer of wealth to lucky individuals…’

      The other initiatives Labour are introducing will help cool the market.
      I would like to see it…crash.

      • High Flying Duck

         /  July 6, 2018

        What have they or will they introduce to cool the market? They are not increasing supply – just renaming projects that were already going ahead.

        • Blazer

           /  July 6, 2018

          Preventing foreigners buying up existing stock will help.Why do you think all the usual suspects do not like the policy?Only 3% ..remember.

          • Kitty Catkin

             /  July 6, 2018

            What a spiteful wish, If it did, it would be disastrous.

  6. Blazer

     /  July 6, 2018

    the quotes are from Key in 2007…so he indeed identified the issue 11 years ago.
    As people know National spent their terms denying there was a crisis,and now squeaky Bridges and Adams admit there is..one.

    ‘Wage rises outstripped inflation for the duration of the National government,’

    only the faithful…believe that calumny.

  7. 2Tru

     /  July 6, 2018

    You would have to wonder who would want to buy a house sight unseen, with basic utility and max 3 bedrooms (haven’t seen any talk of larger houses). OK it might be an investor who is prepared to live in it for 3 years, but I guess mainly it is likely to be someone a bit more desperate to own their own home. And the suggestion of massive capital gains for a basic house is unlikely anywhere but Auckland and Queenstown because $650,000 is at, or well above, the current cost of an average house. Why wait 12 months and find the price has gone up, when you could buy a decent house in say Wanganui for Dunedin for much less. The ability to get a mortgage for a kiwibuild house at that pricel and service it will count many people out even if they win a ballot. I believe Labour has got it all wrong!

    • Kitty Catkin

       /  July 7, 2018

      A really nice 3 bedroom house, prefab, costs well under $200,000. 2 bedrooms are very cheap.

      These can be done in 6 weeks or less, are ready to move into (even the walls are painted and the taps and dunnyroll holders in place) and I can vouch for them being attractive houses whose simple lines will probably stand the test of time well. They are as mainteance free as any house can be, with everything made of permanent materials. They have verandahs and decks.

      I would gladly live in one.

      May God forbid that such an obvious solution as these houses should be adopted.

  8. David

     /  July 6, 2018

    Its hard to know where to start with the fuckwittery of what Twyford has done. They had the chance to really help hard working lower income Kiwis into homes and they just dont have the fortitude or smarts to make it work despite Twyford regularly articulating the steps needed.
    Might as well have left National in charge.

    • Kitty Catkin

       /  July 6, 2018

      National would be unlikely to consider that anyone whose income was about four times the average needed a handout.

      I was not really surprised when the Herald test told me that as someone with $180,000 a year income, I was in the top 13% (I wish that it was true, but I just put that in to see where someone with that would be)

  9. PartisanZ

     /  July 6, 2018

    Well, one thing it definitely ain’t is “socialism” … eh what!?

  10. Kitty Catkin

     /  July 7, 2018

    Why don’t the silly twats just buy existing houses and sell ’em on ? Too obvious, I suppose.

  11. wooden goat

     /  July 7, 2018

    Well well…… Socialists having policies that don’t work!
    Who would have thought it! 😀
    And yet people *still* vote for them!